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April 15, 1997updated 05 Sep 2016 12:16pm

EXCITE REPORTS HEAVY Q1 LOSSES

By CBR Staff Writer

Proving that internet advertising is not enough to sustain a viable internet business, even one with a good brand name, Excite Inc hit the information super-railroad buffers in spectacular fashion yesterday with heavy first quarter losses caused by the absence of any product revenue in its first quarter. About a month ago AOL launched its AOL Net Find service which uses Excite’s engine, as part of the Webcrawler deal. The deal started on March 31 and Excite received only a last minute flurry of activity, and virtually no product revenues. Merger costs and other charges of $4.3m helped push Excite into the black in the quarter to the tune of $8.8m, or $0.72 per share, up from $5.6m the year before but down from $12.7m the previous three months, which also included a $4.3m charge. The improvement was almost entirely due to improved revenues and lower marketing costs. Revenues rose to $7.5m, $1.4m a year ago and $6.5m the previous quarter, and marketing costs are down mainly because the company has completed its attempt to heighten brand-awareness on the back of Jimi Hendrix: Excite used his Are You Experienced? song in a series of TV, magazine and billboard adverts. Wall Street actually expected worse. According to First Call, the average estimate on the Street was a 0.43 loss per share without the charge; it actually came out at $0.37 per share, or $4.5m. Of that $4.3m hit, $2.5m was for in-process research and technology from the acquisition of the Webcrawler engine from America Online Inc in December. There’ll be a further $1.6m next quarter, before leveling out at $1.0m for each of the four periods next fiscal. Despite grumbling about the cost of being one of Netscape’s so-called Premier Partners and appearing as one of the options on its Net Search button, Excite duly signed again on the dotted line for the new service which is due to start May 1. It used to cost each company $5m a year, but there’s no word on what Excite, Yahoo!, Infoseek and Lycos paid this time round. Cash and equivalents were $15.0m as of March 31 Excite is due to move to a TV-like channel model for its content in the next few weeks.

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